WTO negotiations have been primarily about the liberation of trade through the removal of tariffs. Poor countries wish other member nations to remove their tariffs while they keep theirs so that current domestic activities remain intact. The justification by the industrialized countries to maintain a deaf ear on this issue is the preservation of jobs in their economies. It is widely believed in the industrialized Western economies that in the last two decades, tariffs on imports to their economies have been brought down to a historic low. Much to their regret these moves have not been matched by similar declining trends among the under-developed economies or towards the industrialized partners in WTO. In July Robert Zoellik, the US trade representative told a business forum that “the average trade-weighted tariff for the United States is now under 2 percent”. The US customs service records indicate that the tariff collected last year was $18.6 billion on $1.1 trillion. These figures make the average tariff rate even much lower than indicated by Robert Zoellik. However, tariffs are not paid on “averages” but on specific values in the currency of the respective country. Further let us not forget that statistics are one of the three lies that Disraeli, the British prime minister spoke about a century ago. Tariffs in the industrialized countries are extremely low on expensive consumer goods such as cars, appliances, televisions etc. On consumer goods such as cutlery, tableware, textiles, shoes, clothes etc. they are high. In other words the industrialized countries in effect have two tariff systems. One low on high-tech/luxuries for the rich economies and one high — for everything else to the world which include the poor economies.
A study by Edward Gresser at the Progressive Policy Institute, USA, states that “the structure of the tariff system is simple: tariffs are low overall, high on consumer goods, and especially high on cheap goods”. To clarify the issue he states that “employment in high tariff industries now account for only about three percent of US manufacturing jobs. It has fallen by half since 1990, and the plunge is fastest in some of the most protected industries. In 1992, for example, 20,000 Americans worked making women’s shoes. No shoe tariffs have been cut since the 1970s, but since 1992 employment in women’s shoes has fallen by 90 percent”.
For the poor partners in the WTO such as Bangladesh, Cambodia, Nepal, Pakistan, Mongolia etc. low priced goods such as clothes make up 90 percent of their exports that they wish to exchange for the luxury/high tech of the industrialized West. This is not achievable when the tariffs they have to pay are “nearly 10 times the US average” that Robert Zoellik repeatedly publicises and “15 times the rate for wealthy countries”.
Once again it is worth stating that the underdeveloped countries, including the 22 Arab countries, should reduce tariffs between their economies to activate sustainable trade. Regrettably tariffs do not make headlines in the international media. However tariffs certainly slaughter consumers whose voices do not make big “hits” with the media. Tariffs in all economies are merely sections in the books of international trade regulations with no central responsibility. This is divided between the “assessors” and the “collectors”. A recent World Bank report states that “Nepal still exports more each year to the United States than to its giant southern neighbor, where clothing imports are often simply banned and tariffs on other goods regularly reach 40 percent”. The trade between the 22 Arab states is around six percent of their total international trade. No wonder their economies are stagnant, their people are unemployed and their wealth is prisoner of banks while their roads are crowded with beggars. Flight of their best brains to the West continue unabated.
Clearly there are no saints in the WTO club. But let us hope that they can be responsible partners to deliver the promises made to their peoples. World economies are moving steadily towards recession. It would be a bliss in disguise if the technocrats can become less of a group of bureaucrats. They should not take no for an answer when they are entrusted to make the world a happier place to live. But they should make it their wish to the world for a truly prosperous 2003.
Arab News Features 30 December 2002